For Sale: Keys to the City

The City of Deerfield Beach is cracking open like a cantaloupe, one side led by Mayor Al Capellini and City Manager Larry Deetjen and the other by commissioners Steve Gonot and Martin Popelsky.

City Hall meetings are marked by shouting and chaos. Armed guards have been called in for protection. Forces led by the mayor and city manager are trying to recall newly elected Gonot on dubious allegations. And a political ally of the mayor, marina owner Todd Littlejohn, sued Popelsky just last week for defamation.

Why? Because Popelsky  who wants Capellini and Deetjen to resign so badly that he promises to follow suit if they do  reported to the Broward Sheriff's Office that he'd been told Littlejohn had made disparaging remarks about him involving threats of decapitation.

Then there have been the personal embarrassments. The 58-year-old divorced Capellini had a much-publicized imbroglio with a 36-year-old city lifeguard who claimed she was pressured by her supervisor to date the mayor. And most recently, there was Deetjen's blowup at the Palm Beach County Airport, during which he was accused by an airport parking employee of making racist remarks.

It's gone from the ridiculous to the absurd  and would almost be funny if the fiscal health and sanity of this heretofore rather quiet seaside town of 67,000 people weren't at stake.

Beneath the lawsuits and antics and vitriol, though, are serious allegations. There have been murmurings for years that Capellini, a brash New York-born civil engineer who has been Deerfield's mayor since 1993, has abused his public office for personal gain. It's been almost all talk, however, talk that has been promptly swallowed up in the babble that has consumed the city.

A New Times investigation set out to determine if there was any substance to those claims, with a focus on Capellini's private firm, Atlantis Environmental Engineering. City records, numerous interviews, and a review of several years' worth of commission meeting minutes reveal a mingling of the mayor's public duties and his private business deals. The investigation found insider city dealings involving the mayor's engineering clients as well as cronyism, some apparently at the expense of the city's residents.

The findings also show that the mayor has at times hidden his involvement with clients, often with peculiar commission-meeting maneuverings that include Capellini slipping off to the bathroom during votes that helped clients.

More important, they suggest that the mayor may have violated state ethics laws and broken Florida's criminal corruption laws that forbid public officials from profiting from their public duties.

Much of Capellini's questionable conduct revolves around Atlantis Environmental Engineering and his business partner, Bill Gallo, a Harvard-educated architect and certified pilot who routinely represents clients before the Deerfield Beach City Commission. The pair's business ties involve a string of city projects and private partnerships, including mysterious land investments in Central America.

To understand how the mayor's public duties and private business may have collided, a good place to start is Arbor Green in western Deerfield Beach. It's a bucolic tennis club and townhouse project in the suburbs. And it's a place where Capellini and Gallo forged their first known financial bond.

The late-night, three-alarm fire was only tennis pro Gary Kesl's first stroke of bad luck.

The 1998 fire destroyed Kesl's Deer Creek Golf and Tennis Club, which was worth more than $1 million. One of South Florida's most highly regarded tennis instructors  Kesl has trained five junior Wimbledon champions and several collegiate All-Americans  he tried to rebuild on the nearly six acres of prime suburban real estate.

But the City of Deerfield Beach  often in the persons of Larry Deetjen and Al Capellini  kept getting in his way.

After the fire, the city allowed him to keep a trailer on the property so he could continue doing business. Then he began working with a major development firm, Pulte Homes, to construct condos on his property.

He says Deetjen and Capellini, who both lived in the nearby Deer Creek neighborhood, initially showed interest in the project and would stop by to talk about it. But their interest soon turned into antagonism, city records show. The mayor was quoted in community newspapers as saying that, before Pulte Homes could be approved, the city needed to get as much as possible out of the project. Deetjen chimed in with the notion that Pulte should allow the city to run a tennis club on the property.

Ultimately, Kesl's negotiations with the city went cold. On October 5, 1999, an agenda item was put before the City Commission to force the tennis pro to remove the trailer. It would force Kesl out of business  and the city didn't even notify him of the meeting. He learned about it from a published report.

Kesl's attorney, Margaret Cooper, represented him at the meeting. Capellini, taking the role as lead antagonist, told Cooper that the trailer had been approved for one year and that time was up. Cooper complained that the city was partly responsible for holding up the project, because staffers had lost the original development plan and were stonewalling the developer.

Capellini was intransigent. He noted that the development called for 25 units per acre when zoning allows for only 15. Cooper pleaded with the commission for a 30-day extension, saying that the removal of the trailer would destroy Kesl's livelihood. Capellini said the commission would consider such an extension if Kesl posted a $10,000 bond to the city and ceased to do business. Cooper objected, and the commission voted to force Kesl to remove the trailer immediately.

Capellini says he took a deep interest in Kesl's property because the tennis pro was negligent in caring for it and because the density of the initial plan was too high. Deetjen basically conceded that their actions had helped run the tennis pro off the land.

"[Kesl] wanted to have residential development, but he didn't have the background to do it, so we went out and sought development," the city manager says. "It was all done perfectly legally. Kesl wanted higher density, but the city and the residents wanted lower density."

Unknown to Kesl at the time, however, both the mayor and the city manager would ultimately profit from the property after he was driven from the picture. "The mayor and the city manager had an idea what they wanted to do with the property, and ultimately they did it," Kesl says. "I just threw my hands up in the air."

When a German national named Helmut Janssen approached him to buy the property, Kesl was in desperate straits. He sold the nearly six acres of prime residential land to Janssen for a mere $825,000, a bare-bottom price even at the time. "I let it go," says Kesl, who now runs a tennis academy in Pompano Beach.

Janssen's project would be called Arbor Green. He says he went to Bill Gallo for help, because the architect was well-known in Deerfield and had good connections with the city. At the time, Gallo was negotiating a contract with Deerfield to become its "vision architect" in revamping Hillsboro Boulevard, the city's main east-west drag. Capellini and the rest of the commission voted to approve the Gallo contract, which paid him $140 an hour, in June 2000.

Gallo then asked Mayor Capellini to join the Arbor Green partnership, according to Janssen.

"Gallo wanted to bring in Capellini," he explains in his thick accent. "I didn't give up any of my percentage to Capellini... Gallo and the mayor are friends, and that's how it works in life. You have a good friend, and you give them work. It doesn't take away from his duties as mayor."

Although Gallo didn't respond to detailed and repeated phone messages from New Times, Capellini confirms that the architect brought him into the deal.

"I paid to get into the partnership like everybody else," the mayor said. "We had a $7 million bank loan. After we coughed up a lot of money, we paid that bank loan off."

As it happened, the mayor had just gone through a divorce from his wife, Kathy, during which he'd made a windfall. An accounting executive, Kathy alleged in the divorce proceedings that Capellini had an "ungovernable temper" and had choked her during an argument. But the dispute over money was even more heated. Kathy Capellini made $1 million a year; the mayor argued in court that he'd given up his career as an engineer to take care of his two children. He said his sole income was the $1,177 a month he made as mayor, according to newspaper accounts.

Ultimately, the litigants settled, and the mayor was given $1 million in stock from his wife, who took custody of the children.

With the property in Janssen's possession, Janssen and Gallo's first order of business was to put a sales trailer on the site. And Janssen, with the help of Gallo and Capellini, was a little more fortunate than Kesl on that score.

Gallo went before the City Commission on December 19, 2000, to ask for permission for the trailer. Capellini joined in the discussion and assured concerned residents that the city wouldn't rush through the approval process. Then Capellini voted along with the rest of the commission to allow the trailer on the property.

Janssen said the mayor was involved in the partnership "from about the beginning." But Capellini, who also served as engineer for the project and secured various permit approvals from his own city government, says he didn't become financially attached to Arbor Green until after that vote. The partners filed for incorporation with the state on May 14, 2001.

"After everything went through, Gallo came to me and said he was looking for someone as a partner," the mayor says. "They were looking for an additional investor, and I became an investor with them. I paid for my investment."

How much?

"I don't remember," replies the mayor, who became increasingly terse with the questioning. "That land was bought in the name of Helmut Janssen, not Larry Deetjen or Al Capellini. I'd be careful about a lawsuit, because Helmut Janssen has a lot of money. And he's not the nicest guy in the world."

How much money does the mayor have?

"I don't have wealth, but I have enough to sue people," he answers.

During spring 2001, Capellini moved his engineering business into a suite owned by Gallo. He has been there since. "I pay him two or three thousand a month for rent," the mayor says. "He doesn't pay me. I pay him."

The mayor abstained from a June 5, 2001, vote to approve the Arbor Green site plan, which involved 41 townhouses and a new tennis club. "Did engineering work on site," he penned on the legally required public disclosure form, failing to note that he was a partner in the deal.

The mayor wasn't the only city official to profit from Arbor Green. So did his friend, Deetjen, if indirectly. The Arbor Green partnership gave exclusive rights to sell the condos to Deer Creek Real Estate, which employs Deetjen's wife, Lynn. The sales commissions alone were worth an estimated $400,000 or more.

Capellini says he and his Arbor Green partners voted to give the sales rights to Deer Creek Real Estate because it had the best terms, though he claimed not to remember whom he voted for.

Deetjen says Deer Creek Real Estate was chosen simply because it's the leading firm in the area. "I venture to say that my wife sold two units at most," he says. "Lynn Deetjen is the best realtor in Deer Creek. You know how I know that? Because I sleep with her every night. She's the best. Shame on anyone who would question one of the most caring people in all of Deer Creek."

Unbidden, he explains that he has had several children who have gone to top colleges around the country. "You think I paid for all those on my city manager's pay? No, I paid them on two wages, including my wife's," says Deetjen, who makes $150,000 a year at the city.

The city manager said the Arbor Green project represents nothing but a great project for the city. "Arbor Green is a beautiful project with fantastic units," he avers. "It fits beautifully into the community. Everybody loves that."

As for the tight relationship with Capellini, the city manager is unapologetic. "I am proud of having a close relationship with the mayor," he says.

That close relationship is evident in most city dealings, including those that appear to involve more of the mayor's mingling of his public office and private interests. Soon after forming his partnership with Gallo at Arbor Green, the mayor struck up another business association with the architect  and this time, it came at the expense of the residents the mayor is supposed to represent.

Linda Mooney has been living on Crystal Lake in Deerfield Beach for a decade. And she's noticed a peculiar trend: The longer she lives there, the smaller the lake becomes.

The lake, a popular place for boaters as well as turtles and birds, just keeps shrinking.

It's no secret why. The northern side of the lake is an industrial zone where companies have been improperly filling it in for years. The most recent culprit has been the Lanzo Construction Co., which Broward County recently cited for, among other charges, improperly filling the residential lake.

But Mooney blames one man for Lanzo's actions: Mayor Al Capellini.

"After all I've done for the mayor, he betrayed us," says Mooney, a longtime city activist who serves on the city's Planning and Zoning Board. "I supported him in all of his elections, and I've had him out here to meet residents many times. He said he would always protect the people and protect the lake. And then he turned around and helped to destroy it. I'm very sad and disappointed."

To understand Mooney's outrage, you must go back to 2001, when Lanzo proposed to build a public walkway and three warehouses on the property it owns on the north side of the lake. The company hired architect Gallo to oversee the project. And Gallo, following the pattern begun with Arbor Green, promptly hired the mayor to help get the City of Deerfield Beach to move on necessary approvals and obtain county permits to fill part of the lake.

Capellini accepted the job and, on March 25, 2002, sent a letter to his city's planning director, Jerry Ferguson. In the letter, Capellini informed Ferguson that his company, Atlantis, was working for Lanzo.

"[A] letter of approval agreeing to the plat [mapping] change is required from the City of Deerfield Beach," the mayor wrote on his company's letterhead. "Please place this item on the agenda for the next available meeting."

Was the mayor ordering the city official to help his client?

"I didn't take it as a directive but as a request from a businessperson," Ferguson offers.

Does he get similar letters from private interests?

"We get requests, but rarely do they specify the process that we should follow. That's not common, but I guess the mayor... well, I wouldn't want to speculate. But I've never felt strong-armed by the mayor to do anything."

Ferguson replied to Capellini that the city would first have to abandon its rights, or "flow easement," on the half-acre of lake. It was a process that would take 60 days and require approval from the City Commission.

Interestingly, the walkway was to be paid for by the city. The plan was for Deerfield to raise $500,000 in grant money and give it to Lanzo to build the project. In other words, Capellini was essentially paving the way for Lanzo  and Gallo, the designer  to receive a chunk of public money.

While Lanzo went through the permitting process, the mayor's intertwining business interests with Gallo deepened. On October 20, 2003, he and Gallo with two other partners formed a real estate firm called Pine Ridge Real Estate Enterprises.

Three weeks later, on November 10, 2003, county environmental officials sent a letter to Capellini's engineering firm stating that they needed documentation to show that the city had abandoned the flow easement. The mayor, however, never obtained permission from the commission. Doing so would likely have forced Capellini to publicly reveal his financial connection to the project. Instead of going through the proper channels, Capellini's ally, City Manager Deetjen, wrote a letter to the county stating that "the city understands, also it is fully aware and approves" of vacating the rights to the half-acre of lake.

The commission, of course, had approved of nothing. The question: Who told Deetjen to send that letter? The city manager says he doesn't remember. It's a claim he also relayed to the Sun-Sentinel for a story the newspaper published about Lanzo last month (an article that made only brief mention of Gallo, whose relationship with the mayor has never before been investigated by any newspaper). But the mayor admitted last week to New Times that an engineer who works in his firm named Shane Munson made the request.

Though this seems an example of the mayor's using the power of his office for private financial gain, Capellini says he sees nothing wrong with it. He also denies that he ever hid his financial involvement with Lanzo from the public. But city records seem to suggest otherwise.

Lanzo's site plan for the warehouses came before the commission on March 15, 2005. Before an architect in Gallo's firm began a presentation, Capellini got up and left the room. It was 8:45 p.m., according to the meeting's minutes. The commission voted to table the item until the next meeting.

Capellini, however, didn't return until after that vote, at 9:25 p.m. Contrary to Florida law, he didn't disclose his conflict of interest. When asked last week why he walked out of the room, the mayor says: "I had to go to the bathroom  hey, the important thing is I didn't vote."

Forty-minute bathroom breaks aside, state law dictates that all politicians file disclosure forms and officially abstain from votes where there is a conflict of interest. The Florida Commission on Ethics ruled that elected officials are not exempt from the law if they are temporarily absent during the votes. Meeting minutes, however, reveal that Capellini repeatedly had (as some of his commission colleagues describe it) a "convenient bladder" during a few key votes.

The mayor didn't show up at all for the next meeting, on April 5. Records don't show a reason for his absence, but again it kept him from disclosing the apparent conflict. In a glaring loophole, elected officials who miss entire meetings that include a vote on an issue that presents a conflict of interest are exempted from the abstention requirement.

Two weeks later, Capellini attended a special workshop regarding Crystal Lake, which came about as a result of numerous phone calls from residents, like Mooney, who were angry and concerned about the warehouse project. At the workshop, Capellini explained the Lanzo project to his fellow commissioners  who, along with the rest of Deerfield, still didn't know he was employed by the developer. The mayor mentioned that Lanzo had obtained all the required permits, including the one from the county that he'd apparently helped the company obtain. He touted the project, saying Lanzo had a right to fill the lake.

And he did it all in his role as mayor, not as a Lanzo engineer.

"He never revealed that he was working for Lanzo, and as mayor, he definitely should have," says activist Tom Connick, who is also an attorney in Deerfield.

Capellini's defense: "I didn't vote."

Commissioner Martin Popelsky, who was elected in March 2005, says he learned about the mayor's job during a meeting with Lanzo and Gallo representatives at the company's office in Deerfield last summer. When a Lanzo attorney told him that Capellini had been hired as engineer on the project, the commissioner says it was the greatest shock of his short political career.

"I turned white and rolled up the plans that were sitting on the table," he recalls. "Then I said 'This meeting is over' and walked out the door."

Popelsky has been a devout opponent of the project ever since  and he recently publicly called for the resignations of Capellini and Deetjen. He raised the issue at a commission meeting on March 21 of this year. Capellini argued with Popelsky on the dais, defending Lanzo.

"Popelsky is a feeble old man who has lost his mind," the mayor said of his fellow commissioner. "He doesn't know what he's talking about. The company had a right to fill what it filled. What don't people understand about that?"

The commissioner says he will ask the mayor to justify his accusation of senility at the next commission meeting. "The mayor is entitled to his opinion," Popelsky says. "I don't think what he said is appropriate, obviously."

The brash mayor, however, doesn't shy from words  or deeds  that might be considered inappropriate. At the same time that Gallo was helping Capellini profit in private construction deals, the record indicates that the mayor was trying to help his business partner obtain plum city projects.

Gallo's financial relationship with the city dates back to June 2000, when the commission voted to hire him as a city designer. The contract was signed by City Planning Director Ferguson on March 19, 2001  about the time the mayor became a partner in the Arbor Green project.

Capellini has filed numerous conflict-of-interest disclosures during the past five years that involve Gallo projects. But he's also had several lapses. On November 18, 2003, Capellini voted to approve Gallo's design plan for the Hillsboro corridor for the city. He failed to mention that Gallo was his business partner.

"That had nothing to do with my firm," Capellini says.

But Gallo's status as hired gun for the city pales in comparison to the kind of money he was expected to make for building public parking garages. In 2002, Capellini was a driving force behind a plan to build a three-story, $11.5 million parking structure on AIA at the beach. On the dais, while wearing his mayor's hat, he urged the building of the garage and was even quoted extensively in the Sentinel about it.

Many residents, however, believed that the garage was not only too large for the quaint beach area but also unnecessary, since two private companies had plans to build parking lots at the time as well. The mayor rebutted those concerns in the newspaper. As for the size, Capellini argued that if the city built it, the people would fill it. "People want to come to Florida," the Sentinel quoted Capellini as saying during a September 17, 2002, meeting. "They want to come to Deerfield Beach."

Ultimately, the dreams of Capellini and Gallo to build the beach parking garage were crushed by the people. In November 2002, voters passed a ballot measure limiting buildings to two stories on the beach, scuttling the three-story project.

But it didn't take long for Gallo and the city to come up with another public parking garage plan. This time, it would be a $9.5 million, six-story garage near Cove Shopping Center on the Intracoastal. The city owns land in the area but intended to build the garage on land owned by Landrys Seafood Co., which operates a restaurant on the property called Charley's Crab.

Once again, Gallo was tapped by the city to design it. And, once again, Capellini apparently broke state conflict disclosure laws in the process. On February 17, 2004, the commission voted to transfer Gallo's right to design the defunct beach parking lot project to the new Cove plan. During the Community Redevelopment Agency meeting, Capellini abstained from the vote.

Directly after the little-attended CRA meeting, however, a regular commission meeting convened. Before the commission vote to approve Gallo as Cove designer, Capellini pulled a familiar stunt. According to city records, "Mayor Capellini did not vote... because he left the room temporarily."

It was another bathroom break, according to the mayor. But any chance that Capellini could credibly maintain that he kept clear of the Cove deal flew away on April 29, 2004. Literally.

On that day, Capellini, Gallo, Deetjen, and several other city officials flew to Houston at city expense to negotiate a deal with Landrys Seafood Co.

"The rest of the commission did not know about that trip until after the fact," says Commissioner Gonot, a onetime Capellini ally. "We got absolutely no report on it. They went to Houston, and nobody even had the courtesy to give us a briefing on what happened."

Deerfield's economic development director, Carlos Baia, who was among the officials who flew to Houston, says the city contingent went to show Landrys officials they were "serious" about building the Cove parking garage. In a meeting there, Capellini tried to persuade Landrys to help get the parking garage built.

"He was being a spokesman for the city and CRA in terms of highlighting the benefits for our community in bettering the area," Baia said.

The mayor says he went on the trip because he believed in the project, not because it would benefit his partner. But questions have surfaced as to whether Capellini himself was slated to profit as well. City Planning Director Ferguson says that he attended planning meetings with Gallo concerning the Cove project and that Capellini or a representative of his company, Atlantis, was always present.

Why? It was Ferguson's understanding that Atlantis was acting as a preliminary engineering firm for the project.

Capellini denies that his firm was ever tapped as engineer for the Cove parking project or attended planning meetings. "That's a city project, and I can't have anything to do with that as an engineer," he says.

While Arbor Green was a success, the Lanzo and Cove projects remain in limbo. Both are opposed by the new commission, which is in near open revolt against Capellini.

But if it is determined that Capellini and Gallo struck a corrupt deal or that the mayor sold out his office, then it doesn't matter in the eyes of the law whether those projects came to fruition. Florida's felony unlawful compensation law states that an elected official who influences his own governmental body for private gain need only attempt the misdeed, not accomplish it. It also need not involve a vote.

Capellini and Gallo have not only maintained their business relationship; they've intensified it. Last August, Capellini and Gallo partnered up in a real estate venture in Costa Rica, a country where the mayor has traveled extensively. It's not known if the two men have traveled to the Central American country together; the mayor declined to answer questions about his land deals.

When last contacted by New Times on his cell phone, the mayor said he was out of the country. When asked if he was in Costa Rica, he answered in the negative. But he wouldn't say where he was (city sources say it was Brazil).

Instead he maintained his veil of secrecy. Just the way the mayor seems to like it.

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